Toshiba to Rebuild Thailand Chip Factory Hit By Floods

Toshiba Corp. said it will build a semiconductor manufacturing factory in Thailand to replace the one inundated by last year’s record flooding. Toshiba Semiconductor Thailand Co. will be relocated to a new manufacturing facility about 90 miles northeast of Bangkok, on a site outside of the country’s main drainage basins and with no major rivers nearby, the company said this week.

Construction on the two-story chip factory will begin in July on a lot 1.4 times larger than the previous location. The factory is scheduled for completion in spring 2013. Mass production is expected to start in the second quarter that year.

Flood insurance settlements will pay for most of Toshiba’s initial investment in the factory, including the cost of construction, the company said.

Toshiba established TST in 1990 to carry out the back-end processes, such as assembly and packaging, for photocouplers and small signal devices, which control current and voltage in digital consumer products such as smartphones and tablet computers. The new factory will continue to make both photocouplers and signal devices.

Thailand’s worst flooding in almost 70 years hit at least five major industrial parks last year, forcing Toshiba, Honda Motor Co., Toyota and other companies to shut down hundreds of factories. The flooding also affected companies operating in other countries due to a shortage of key components made in Thai factories. As a result, Thailand’s economy shrank for the first time since 2009 and companies including Toshiba lowered their profit forecasts for the year ending March 31, Bloomberg reported.

Earlier this year, the Thai government announced a $9.4 billion plan for water management and flood prevention that included reforestation and dam construction to prevent flooding along the Chao Phraya river basin.

Companies affected by the flooding have begun to return to normal operations. Honda’s Thai subsidiary resumed production of automobiles last month after suspending production since October 2011 because of damage from the flooding. The company said it plans to run at full capacity of 240,000 vehicle units a year.